Apple's 500M user accounts second only to Facebook, viewed as key driver of future growth

Apple's current account base of 500 million users is growing and spending at a tremendous rate, suggesting to one analyst that new services such as mobile payments or streaming radio could be key to the company's future growth.

Apple's half-billion registered users with active credit cards one of the largest and fastest growing bases among technology companies. In fact, according to data compiled by Morgan Stanley, Apple is only second to Facebook in total number of user accounts as of 2012.

The 500 million active Apple accounts are more than double the 200 million active users registered with online retailer Facebook. In 2012 alone, Apple saw its account base grow an estimated 55 percent.

In terms of revenue per account, Morgan Stanley found that Apple generates an average of $329 per user, which puts it in first place among technology companies, ahead of Amazon's $305 per account, and well ahead of eBay's third-place $125.

And analyst Katy Huberty expects that Apple will reach 600 million users with active Apple IDs this year, extending its lead over rival platforms such as Amazon. She believes that rather than owning content or apps, Apple will instead roll out new platforms that, in the same vein as iTunes and the App Store, leverage content from others.

As for potential ways Apple could monetize its large user base, she believes mobile e-wallet payments could be tied to existing credit card accounts registered with iTunes and the App Store. But instead, those cards could be used with an iPhone to authorize purchases at brick-and-mortar stores, in place of a physical credit card.

She sees the potential inclusion of a fingerprint sensor in Apple's next iPhone, a feature that has been rumored since the company's purchase of AuthenTec, as a step that could set the stage for e-wallet payments on the iPhone.Morgan Stanley's Katy Huberty believes Apple could generate more than a billion dollars per year with an "iRadio" service through its current install base.

Another potential use of Apple's existing customer base is a new streaming music service ??something the company is also rumored to be working on. This week it was reported that Apple has inked a deal with Warner Music Group for its so-called "iRadio," setting the stage for the launch of a Pandora-like streaming service as soon as next week's Worldwide Developers Conference.

With its current user base of 500 million, Apple could generate as much as a billion dollars of annualized revenue through an "iRadio" service, Huberty estimates. Her figures are based on the assumption that penetration of iRadio would range from 40 percent of the install base (which is how many current Apple users are registered with Game Center), and 50 percent (which is how many have iCloud accounts).

Pandora's revenue per user in 2012, excluding audio ads, was $4.42. Using a similar figure, if 40 percent of Apple's current install base were to adopt iRadio, it would generate $883 million in revenue per year, while a 50 percent penetration would mean $1.1 billion.

Finally, Huberty also suggested that Apple could leverage its existing iAd platform to create an ad exchange service. This could allow developers to charge higher rates than for ad impressions on other, non-Apple devices.

"Users benefit from potentially lower pricing for apps and services if developers make some of their money from ads," she said. "The ad experience could also be a lot better as the design and relevancy of ads improve. They could become more tasteful (like fashion magazines) rather than annoying (many ads in Web browsers)."

Morgan Stanley has maintained its $540 price target for AAPL stock, but its "bull case" scenario, with a price target of $670, reflects upside potential from new services.

I'm kinda curious how they define an "active" account for each of the services? And Apple has been bragging about how many "accounts with credit cards" they have for several years now. Steve Jobs mentioned it in several key notes and press events before his passing.

Google has more right? No? GMail users and others must be more. Isn't it? Am I missing something?

Reality is a bitch sometimes. Seems like the "analysts" are suddenly finding reasons for Apple to not be doomed after all. And remember, most of Google's services are so-called "free." The article is clearly referencing accounts that generate income.

But yet Apple is always considered a doomed company. Why? Because Apple's iPhone doesn't have the the biggest display or it doesn't have the highest megapixel camera or because it doesn't have a quad-core processor. It doesn't have an OS with all the bells and whistles that Android OS has. These are the things that the analysts and hedge fund managers claim Apple needs to stay relevant. Things like customer loyalty and hundreds of retail stores don't mean anything to Wall Street. They think Apple is only as good as the specs of their products.

Some noteworthy facts: Apple has been downgraded many times by analysts from banks that have needed to be bailed out by the federal government. Apple is worth far more than Goldman Sachs, Citigroup, Credit Suisse or any number of banks and brokerage houses combined. However, those analysts are always willing to tell Apple how to run its company. They're always happy to prognosticate about how Apple is going fail if they don't do such and such. They sternly warn investors about what Apple needs to do about growth while their own companies are not as sound as Apple is.

Analysts love to scare investors about how Apple is going to collapse overnight because Apple has lost global market share to Samsung over the past year. I suppose the analysts actually believe all of Apple's customer base will just pull all their credit card accounts because iPhones don't have large displays. I honestly don't think consumers' minds work like that at all. I don't believe Apple's customer base exists merely because of iPhone specifications as analysts would have you believe. Wall Street doesn't believe in things like consumer loyalty or trust are worth anything which really leaves Apple shareholders in the lurch.

I wouldn't trust this number for Amazon or for Apple. It appears that all they did was divide Amazon's 2012 total revenue of $61 billion by the 200 million accounts to come up with $305 revenue per account. This presumes that ever dollar of revenue was generated only by these accounts which isn't the case. Amazon has quite a significant business as a cloud computing solution and who knows what other revenue sources that also wouldn't come from these user accounts.

If the same lazy math was used for Apple then their figures could be significantly off as well. As a small example you have billions of dollars worth of Apple peripherals alone that could be purchased at Amazon, Walmart or even the Apple store which add to Apple's revenue but don't need to be tied to a user account.

I've said this all along. People are underestimating how much of an asset having that many customers with credit cards really is. If Apple introduces iRadio (a pay version) or any other service they have an advantage of a large user base of potential people that could sign up with just one click. Apple is also big enough that when the mobile device landscape finally settles down they will continue to have enough users to remain sustainable and highly profitable.

...someone here made it up once in a post and others liked reusing it as a lazy way to dismiss less-than-flattering viewpoints or articles. No knowledgable blog, news article or opinion piece ever said that AFAIK.

I have more accounts than I can remember, all tied to credit cards. Remember that apple will not let you eliminate an account. On the other hand, Amazon, etc. will let you eliminate an account so I would expect smaller numbers for those who allow this. Don't know what the numbers mean???? but let's not confuse the analysts (who also do not know what the numbers mean) What would we do without analysts to come up with all these meaningless numbers?

Reality is a bitch sometimes. Seems like the "analysts" are suddenly finding reasons for Apple to not be doomed after all. And remember, most of Google's services are so-called "free." The article is clearly referencing accounts that generate income.

But then what about the one billion people who watch YouTube videos each month generating income for Google?

...someone here made it up once in a post and others liked reusing it as a lazy way to dismiss less-than-flattering viewpoints or articles. No knowledgable blog, news article or opinion piece ever said that AFAIK.

The term doomed may be hyperbole used here that hasn't been used by news sites writing anti-Apple articles, but it's a single word that sums up half the articles written about Apple. I bet you can't go a day without some major outlet posting an article or blog about how Apple has lost their mojo, how the magic is gone, how repeated missteps are killing their user base, how supply chain issues are rampant, how people have no faith in their products, how Apple has not products in the pipeline, how it was so much better under Steve Jobs, how nothing has come out since Tim Cook took over, and on and on and on and on… The simplest way to sum up all these doom and gloom stories is simply: Apple is Doomed™!!!!!

The term doomed may be hyperbole used here that hasn't been used by news sites writing anti-Apple articles, but it's a single word that sums up half the articles written about Apple. I bet you can't go a day without some major outlet posting an article or blog about how Apple has lost their mojo, how the magic is gone, how repeated missteps are milling their user base, how supply chain issues are rampant, how people have no faith in their products, how Apple has not products in the pipeline, how it was so much better under Steve Jobs, how nothing has come out since Tim Cook took over, and on and on and on and on… The simplest way to sum up all these doom and gloom stories is simply: Apple is Doomed™!!!!!

You are right about this....just wait until after the WWDC and then you will see all the negative press about what Apple should have done and how they should have done it....